You have been asked to analyze the profitability of releasing a new music album by a hair metal band from 1980s. You have been able to collect the following information:

• The band is expecting a one-time royalty payment of $12 million.
• The fixed cost of producing a CD version of the book is $1.5 million.
• The variable cost of producing each CD is $2.
• Each CD will be sold for $11.99.
• The record label expects to sell 1 million CDs.
• The fixed cost of producing an LP is $0.5 million.
• The variable cost of producing each LP is $4.
• Each LP is sold for $21.99.
• LP sales are expected to be ¼ of the CD sales.   

Determine how many CDs must be sold to break even. SHOW ALL OF YOUR STEPS.

Answer rating: 100% (QA)

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